We held our 7th Mobile Breakfast Series Event earlier today. The topic of discussion was “Mobile Commerce and Payments.”

The killer views of the Olympics and the Sound

Mark Young did a great job moderating the panel

The panel expertly delved into the intricacies of the mobile commerce/payments opportunity

The 2011 Mobile Breakfast Series is sponsored by Amdocs. A big thank you for the support.

At the end of every year, we do a forecast survey. In the last survey, Mobile Payments and Commerce were considered the top two categories for growth in 2011. Given the activities thus far – Google Wallet, ISIS, number of startups – Payfone, BilltoMobile, existing players like OpenMarket, financial guys across the board – past few months have been full of significant activity. The mobile commerce developments are right behind the AT&T/T-Mobile proposed merger and Microsoft/Nokia partnership in terms of news coverage.

I remember back in 2001/2, I was writing my 2nd book with my good friend and co-author Nakamura-san who was CTO at NTT DoCoMo and while doing some work for DoCoMo and AT&T, we were exploring ways the mobile device will be used for commerce not only for digital goods but also for physical things. MCommerce has been around for the better part of the last 12 years in some form and fashion, in fact today it is a multi-billion dollar market already. Mobile payments are in different states of maturity and experimentation depending on the region. Do you know the value of US payment distribution - $75 Trillion out of which only 5% is based on cards which accounts for almost $3-4 trillion Total Transaction Value. Paypal is expected to process $4B in mobile payments this year generating over $70M in mobile payments revenue.

OpenMarket processes a significant amount of mcommerce business in the US today. As you will hear from the panelists, they are starting to see good traction from merchants and things are moving from digital to physical. However, things are very complicated – it is a highly regulated segment and changes don’t come every so often. The payment networks are from pre-Internet era and yet they maintain their complete dominance of the ecosystem. So, this sets up a very interesting next few quarters and a perfect time for us at Mobile Breakfast Series to assemble a stellar panel to unwind the realities of the evolving landscape.

Mark has been involved in mobile for a long time and has been at the center of commerce on mobile since the ringtone days at Moviso. Rodger and Payfone have been in the news lately for some raising money and some key partners like Verizon and American Express. BilltoMobile has been involved in mobile payments first in Korea (under Danal) and lately in the US with all the operators for doing payments. Payments is a heavily regulated industry so players in the ecosystem need to have a firm grasp on regulatory winds to ensure their future revenues. Andrew with his deep background in the space was perfectly suited to bring up to speed with pending and existing rules. ISIS has been in the news throughout the year and Michael Goo has been representing T-Mobile to help define the operator strategy in payments. Expedia is one of the largest ecommerce companies and they are seeing some tremendous growth in mcommerce. Joe is right in the middle of all the craziness and his analytical mindset gave audience some great insights.

As i mentioned, mcommerce is not new but mobile web and apps infrastructure along with new methods of interactivity like the NFC are making things simpler for the consumers that it is moving from novelty to convenience to actual dollars.

The panel was just full of great insights and nuggets. The highlights of the discussion was as follows:

For Expedia, the majority of the mobile traffic comes from iPhone, roughly 60-70%, Android is around 25%, Conversion rates are much higher on iPhone, The order size on Android is 10% lower than iPhone.

From a traffic perspective, iPad traffic is double the iPhone traffic though the device penetration is 1/10th. Conversion rates are much higher

Two years ago, the mobile traffic was around 2% when Expedia didn’t have any mobile site. Now it is almost 6% with 10% on Saturdays, Average transaction ranges in the $200-300 range.

Given the traffic dynamics on iPad, it is a unique category in of itself – something we have argued before – it is a new category in terms of consumer behavior.

Most of the traffic for Expedia is from mobile web as SEO and paid search drive traffic to web, difficult to do deep linking, as such mobile web revenue is 5/6 times the app revenue.

In a multi-device, multi-network world, consumers expect the services to just work across the board with same user experience.

Charlie Fodie who is on the board of Payfone expects the interchange in payments to go away over time. This will be indeed disruptive, the question is the timing.

Only 25% of consumers have credit card in their profile with their operator in the US. 30% still pay $9-10B in cash/year to the operators by walking into the store.

Payfone sees an opportunity by doing auction based underwriting in real-time to minimize the transaction fee.

The uniqueness of the device can be used as its fingerprint for authentication. Payfone uses the SS7 network for authentication messaging.

Consumers are unlikely to put $1200 plane ticket on their operator bill. The mind shift is not there, maybe things will shift, but not there in the short-term.

Operators are exploring using the consumer data as a way to refine advertising, open it up to the ecosystem.

Durbanization of all forms of exchange fees is near.

Payfone allows transactions over WiFi on operator bill as well.

In Korea, 80% of people do payments using mobile so the blueprint to get more people involved with mobile payments is there

Verizon has a $25/mo limit on carrier billing. A Canadian operator has $500, so on a 6M sub base they have a $4B cash flow thus essentially becoming a bank. The mindset is quite different compared to the US operators

Merchants are not bought into mobile payments yet. They want to see more adoption before they start investing more aggressively with NFC and other forms of payment.

Industry is underestimating fragmentation, consumer confusion, regulatory headwinds, consumer adoption once friction is removed, and how soon all ecommerce will become mcommerce.

Industry is overestimating how much of the space is going to be defined by the western markets

The panel was full of key insights that impact strategy in this space. I was thankful for the speakers to have made the time, especially the ones who traveled great distances to be with us to share their insights.

Next, our focus moves to our annual mobile thought-leadership summit – Mobile Future Forward on Sept 12th in Seattle. It is shaping up really nicely with some terrific speakers. You can take a look at the info here.

The goal of the event is to look a bit into the future 2-5 years out and see what’s on the horizon. We are deep into the planning stages of preparing another successful event. I want to thank our partners of this initiative – Qualcomm, Ericsson, AT&T, Openwave, Millennial Media, Real Networks, and Synchronoss Technologies.

Venturebeat’s flagship mobile conf – Mobilebeat - is around the corner and we have got a discount for you. This year’s theme is “Who will win in the 4G Nirvana?”

Friends of Chetan click here and use discount code "VB-Chetan" to get 20% off!

There’s no doubt that 4G is more than just a speed upgrade. It allows consumers to use the mobile web like their home broadband connection, which is spurring untold innovation from all major industry sectors. At MobileBeat 2011, speakers will dissect these multi-billion dollar sectors that are being transformed by the new, resource-rich mobile networks and platforms: Payments, e-commerce, phone & device makers, cloud, web development, mobile gaming, and more.

You’ll also get a peek at 20 of the hottest new mobile startups in the applications and infrastructure/services categories as they present live onstage at the MobileBeat 2011 Startup Competition.

Just wanted to do a quick update on next week’s Mobile Breakfast Series event on Mobile Commerce and Payments (June 28th ).

We are excited to add Joe Megibow, VP, Mobile and E-Commerce Optimization at Expedia to the mix. As you know Expedia is one of the leading players in e-commerce. They are doing some really good work in the mobile commerce space and are further into implementing the strategy than most.

In his role, Joe has global responsibility for Expedia’s mobile initiatives, including Mobiata, the leading provider of mobile travel apps. Joe also oversees e-commerce optimization activities including leading-edge site conversion optimization techniques, marketing, site, and customer analytics, and site experimentation. Finally, Joe has product management responsibility for core e-commerce flows, including product search and checkout. He joined the Expedia, Inc. family in 2006, heading up Online Marketing and Customer Experience for hotels.com. He is very analytics and data driven and was recognized in March 2011 as the recipient of the Practitioner of the Year, Award for Excellence by the Web Analytics Association (WAA).

Hardly a week goes by without a new announcement/initiative in mobile commerce. There is clearly lot of attention but so are the number of questions about business models, growth trajectory, ecosystem dynamics, key success criterion, timing, and just how is this space going to evolve over time. We are glad to be able to assemble a stellar group of individuals who are deep into mobile commerce on a daily basis.

Rodger Desai, CEO and Cofounder, Payfone – Fresh from their $19M round, the company is starting to break into the market with its unique value prop

Jim Greenwell, President & CEO, BilltoMobile – The parent company Danal has been doing m-commerce in Korea for some time, and now they are seeing success in the US market

Andrew Lorentz, Partner, Davis Wright Tremaine – Commerce and payments has an important regulatory and legal aspect that will be well covered by Andrew

Mark Young, VP – Strategy, NBC Universal (moderator) – Mark is a consumer of these commerce technologies and has good insights into the issues in the ecosystem that needs to be addressed

Michael Goo, VP – Strategic Initiatives, T-Mobile – Michael has been the co-architect of the ISIS business model and deeply involved in all things mobile commerce

About four years ago, I wrote a paper on how one should think about patents and patent portfolio - “What’s your patent portfolio quotient?” Companies often misunderstand patents and IP and waste an awful lot of resources on securing the wrong things and fighting the wrong battles. If patent strategy is integrated into the product and marketing strategy, companies do well. Given the cut-throat competition in the mobile space, it is even more critical to formulate good strategies. It is a good time to revisit the paper. Having seen the complete lifecycle of a patent from birth to end of life from grant to licensing to litigation, the paper offers some practical advise on building IP.

Abstract below and link for the paper at the bottom.

Abstract

Over the last twenty years, the global economy has slowly transformed into a vibrant knowledge economy. With reduced barriers to entry and pervasive globalization, a small company in a developing world can compete for its share on the world stage. The invention of new ideas and products remains an integral part of the global economy and the commercial food chain. Patents are an invaluable tool to protect and commercialize the inventions. They are essential to creating the barriers to entry for rivals. They are needed for building the credibility and the confidence of investors, customers, partners, and employees. They are required for providing clarity as to the property ownership, for demanding leverage from the industry, and for generating sustainable revenue from licensing and sale.

In the global marketplace, amongst all the other competitive factors, innovation matters the most and patents can help deliver the competitive edge required to remain viable. Inventors who used to see patents solely as part of their defensive strategy (and to alleviate any future litigation risks) to prevent competitors encroach their space are looking to be more aggressive with their inventions to make patents part of their offensive and licensing strategy. To ensure the financial security of the patents, some companies are embedding their IP programs as part of their Knowledge Management and Risk Management initiatives where they capture know-how, harvest IP and ingrain IP into their product development lifecycles.

Patents will continue to grow in their contribution as a key corporate asset. Since much value is associated with patents, the industry need better tools to assess and to understand the valuation and the strength of the patent portfolios. This paper will introduce the methodology of Patent Portfolio Quotient™ (PPQ) to measure performance of your patent program and portfolio that enables a Return on Investment (ROI) driven approach. PPQ measures the quality of the patent portfolio and the patent program with clear policies and procedures as it relates to the lifecycle of patents within an organization from innovation to licensing or sale. We will review the importance of patents as a tool for competitiveness and their value to a corporation. Next, we will address - why a patent program should be integrated with product development lifecycle to extract the maximum value from their intellectual property assets. Finally, the paper will introduce the basics of PPQ and discuss what inventors and companies can do to increase their PPQ.

The future of mobile technology, business models, and consumers will be envisioned by key influencers and thinkers at this leading mobile industry summit

SEATTLE, WA – June 16, 2011 –Mobile Future Forward, the wireless industry’s annual mobile thought-leadership summit, today announced that executives from leading communications companies, including AT&T Wireless, Sprint, Qualcomm, and HTC, will headline the 2011 conference speaker program. The event which takes place in Seattle, WA on September 12th is dedicated to discussing, debating, and deciding the future of mobile.

“Mobile Future Forward attracts a unique blend of visionaries and decision makers who influence billions of dollars of investment and purchasing decisions on a regular basis. Therefore, it is critically important to understand the evolution of the mobile ecosystem through their eyes,” said Chetan Sharma, Founder of Mobile Future Forward.

The distinguished thought-leaders for the 2011 program include:

· Glenn Lurie, President, AT&T Wireless;

· Danny Bowman, President, Sprint

· Steve Mollenkopf, EVP & Group President, Qualcomm

· Jason MacKenzie, President, HTC

· Sanjiv Ahuja, CEO, LightSquared

· Charlie Herrin, SVP, Comcast

· Paul Palmieri, CEO, Millennial Media

· David Messenger, EVP, American Express

· Erik Moreno, SVP, FOX

· Gibu Thomas, SVP, Walmart

· Hank Skorny, CSO, Real Networks

· Ken Denman, CEO, Openwave Systems

· Kris Rinne, SVP, AT&T

· Mike Mulica, President, Synchronoss Technologies

· Will Hsu, CPO, AT&T Interactive

· Suja Chandrasekaran, CIO, Timberland

· Prof. Cliff Nass, HCI, Stanford University

· Jo Harlow, EVP – Smart-Devices, Nokia

· Ken Wirth, President, Alcatel-Lucent Wireless

Mobile Future Forward is designed to help understand the tectonic industry shifts happening in mobile consumer behavior, technology and the telecoms business models over the next 5 years. The conference will help prepare the participants with critical understanding of the opportunities and the turmoil to come.

“We can expect more changes in the next 10 years than the previous 100,” said Chetan Sharma. “It is the companies that recognize and prepare for these disruptions and advancements that will prevail.”

During the conference, many important possible scenarios will be discussed and debated. The scenario triggers will vary but each of these factors can have an impact on how something trending now, will later become fact of life. To maintain their competitiveness and relevance in a trillion dollar mobile economy, players need to be better prepared and agile. Mobile Future Forward provides a platform for discussion, networking, and for shaping the mobile industry growth.

Industry professionals can also download the Mobile Future Forward book published last year at the conference, which contains 18 exclusive thought leadership essays from high level industry executives at http://www.mobilefutureforward.com/.

About Mobile Future Forward

Mobile Future Forward is the mobile thought-leadership summit that attracts the most influential minds in the mobile industry. Participants include C-Level executives who are very instrumental in shaping the industry, in innovation adoption, and in managing the growth of revenues and profits. The experts and visionaries from around the globe will convene in Seattle on Sept 12th to envision and define the mobile industry over the next 5 years. Mobile Future Forward is produced by Chetan Sharma Consulting, the leading management and global strategic advisory firm to mobile industry leaders. http://www.chetansharma.com.

To create the future, we must first be capable of imagining it - Gary Hamel and C.K. Prahalad, Competing for the Future, 1994

The Event

It was the most satisfying experience of my career. The contest and the Mobile Future Forward summit made me reevaluate my research and career from a fresh perspective.- Lun Huang, Phd Student - Electrical Engineering, Illinois Institute of Technology, 2010 Mobile Future Forward Student Paper Contest Winner

Being selected as one of the winners of the contest presented me with an absolutely enriching experience. The most exciting part of the experience was the opportunity to interact and network with top industry leaders from all major mobile companies.- Smruti Parichha, Grad Student - Dept of Computer Science and Engineering, University of California, Riverside 2010 Mobile Future Forward Student Paper Contest Winner

Mobile Future Forward is an executive summit attracting some of the most influential minds who are shaping the mobile industry. The experts and visionaries from around the globe will discuss the mobile industry 2-5 years forward, envision what the user experience and use case scenarios look like, discuss and debate the challenges and opportunities in the journey to that vision.

The Contest

The best student paper contest is open to universities and research institutes around the world. Your task is to help us imagine new technologies, new experiences, new applications and services, new use cases, new business models of the mobile future. The paper can be on a specific technical or business subject within the mobile industry from mobile teleportation to fuel cells to a new enterprise collaboration tool and everything in between. The idea is to let your imagination fly without any restrictions and dream of what’s possible in the next 5-10 years. Papers can be about technical solutions to the most pressing problems, about new revenue models, about your vision of how mobile will be used in the future, etc. Paper length: 1000-1500 words.

The Prize

Authors of the top two outstanding papers will get a paid trip to attend the conference and mingle with the who’s who of the wireless industry. Winners will also be eligible for more prizes. Please send in your entries by July 15th, 2011 tocontest@mobilefutureforward.com including a copy of your current student ID. Use of graphics and illustrations is encouraged. While an indication of interest is not required, it is appreciated. A panel of industry experts and executives will vote on the best papers. They will be ranked on originality, ambitiousness, creativity, depth, and clarity of vision. The goal of the contest is to bring out and reward the best thinking from the leaders of tomorrow.

2010 Student Paper Contest

Lun Huang of Illinois Institute of Technology and Smruti Parichha of University of California, Riverside wrote the top two winning papers respectively and were invited to meet with the senior executives in the mobile industry and attend the Mobile Future Forward Executive Summit. Our thanks to all the students who participated, the judges who helped us pick the winners, and Intel for supporting the contest. See details here.

NY Times in its editorial this weekend compared Microsoft to Kodak implying its days are numbered.

Technology upends companies in different ways. It allows new firms to deliver better products and services in a more efficient way; it also creates new goods and services for consumers to want. Eastman Kodak, the fifth-biggest company in the S.& P. 500 in 1975, was almost destroyed by digital cameras and is no longer in the index. General Motors, fifth biggest in 1985, was hobbled by rivals that could make more fuel efficient cars. Microsoft still rules the PC desktop. But that will matter less and less as users migrate to tablets and more computing takes place in “the cloud.”

There is no doubt that Microsoft has had missteps esp. in the mobile space over the last 4-5 years but calling them a one-trick pony is taking the argument too far. Apple has clearly taken away the mantle of the technology leader in the mobile space but Microsoft is still very strong in the enterprise and its Xbox team is doing really well. While Bing is behind, the mobile Bing team has done some really good work. It has multiple businesses that are doing well giving it enough runway for the foreseeable future but the market won’t wait forever. It’s big bank balance will also help it compete.

Kodak was completely unprepared for the digital world and didn’t have many product lines to offset the losses. Microsoft is different, there are units that are doing cutting edge work and there are others like “online” which are bleeding money. However, as many players in the industry with long memories will tell you – you never count Microsoft out.

Apple announced their iCloud offering today. Idea is pretty simple – Cloud becomes the data center for all devices especially for media content – photos, videos, songs, documents, etc. We wrote about that in our Mobile Cloud Computing paper in much detail.

I wrote about the key success factors for any mobile cloud computing offering -

For any mobile cloud computing service to reach the masses, it has to get the basics right specifically around the user experience and the pricing. As past experiences have shown - if one gets these wrong out of the gate, it is very difficult to get the users interested again.

The key success factors for any mobile cloud computing application or service are:

The success of a product or the service is defined by the “end to end” user experience and the perceived value users have. A product or service that has a positive impact on user’s emotions, needs, preferences, perceptions, and behaviors has a better chance of reaching mass market in a short-amount of time. In the case of mobile cloud computing, the picture is multi-dimensional, as the service has to adapt to multiple devices and networks and hide the complexity from the user. It should just work.

Pricing is a key element that makes the difference between a niche service and a mass-market phenomenon. Consumers should perceive that they are receiving more value for what they are being asked to pay. Many excellent services never caught fire primarily because the value equation was imbalanced. For e.g. the MediaFLO service from Qualcomm was technically perfect but because of the high cost structure, limited operator promotion and distribution, and high pricing for the consumers, it never caught on. There are similar examples throughout the history of the mobile industry. Any new service should first earn its value.

We are living in an increasingly fragmented world. Our content and media consumption is across multiple sources and with different providers. Our preferences and tastes are continuously evolving. Any vertically focused service needs to account for this new reality. This means that interoperability is not a feature but a key functionality without which the service won’t get much traction. The cloud computing ecosystem is going to have multiple providers for example, a consumer is likely to have music files with Apple, books with Amazon, pictures with Google, address book with T-Mobile, friends photos on Facebook, family videos with Yahoo and so on and so forth. Any media cloud computing solution should be open enough to ingest content from any service and provide the capability of multiple cloud services from a single interface depending on consumer preferences. Cloud service providers who try to lock consumers into their databases without offering transparent interoperability will see their short-term advantage whittle away over time.

For the most part, mobile is still limited by the size of the screen. Consumers on the run have different expectations for media/content consumption. Instead of a series of links, they are looking for answers. Whether it is the song lyrics or associated social data of music and video files or the location and auto-recognition of the individuals in a photograph, rich metadata is key to automatically organize content as well as to instantly finding any piece of content across multiple libraries with gigabytes of data. As such, the value of meta data becomes extremely important.

Even though the broadband capability has improved over the last few years, mobile is always going to be under the constraints of congestion, network load, and variable device capabilities. Also, it will be unwise to not take advantage of the device storage, capability and the processing power. A hybrid model provides a perfect balance of user experience, performance, and the range of options. Any cloud service should take advantage of the available resources on the device, in the network, and in the cloud infrastructure to deliver the best experience to the user in real-time. This can only be delivered if the service is aware of the network and the devices at all times. For example, the background syncing of music across various user devices can take place using Wi-Fi or during off-peak hours on a cellular network so as to not burden the network or transcoding the image or the video stream on the fly to adapt to the application, device and network characteristics. Hence, any mobile cloud computing service should be network and device aware at all times.

As always, Apple made the process simple and pricing super attractive. Now, others will have to respond in kind or try to do better with features. Pricing is set – FREE for 5GB (at least for now).

We will be discussing Mobile Cloud Computing and the infrastructure needs and requirements in our upcoming Mobile Future Forward event and will have some terrific speakers to address the topic.

Just wanted to do a quick update on our upcoming Mobile Breakfast Series event on Mobile Commerce and Payments on June 28th.

We are excited to add Michael Goo, Vice President at T-Mobile to the mix. Michael is a co-architect in the creation of the ISIS business model with a continuing oversight role in T-Mobile’s investment in ISIS. His role encompasses both strategic alliances and mobile commerce. Given his involvement in the mobile payments initiatives and strategy, he will be a wonderful addition to our diverse panel.

In our annual predictions survey, the respondents picked mobile payments and commerce as the top two categories. Given the activity in the space in the last few weeks, things are certainly moving in this direction at least for the 1H 2011. A lot is still uncertain and there are too many players in the middle and some have yet to stake their claim but all of this makes for a very interesting 6-12 months in the space and perfectly sets up our panel on the 28th.

Rodger Desai, CEO and Cofounder, Payfone – Fresh from their $19M round, the company is starting to break into the market with its unique value prop

Jim Greenwell, President & CEO, BilltoMobile – The parent company Danal has been doing m-commerce in Korea for some time, and now they are seeing success in the US market

Andrew Lorentz, Partner, Davis Wright Tremaine – Commerce and payments has an important regulatory and legal aspect that will be well covered by Andrew. He has been deeply involved in formulating many mobile payment businesses in the US

Mark Young, VP – Strategy, NBC Universal – Mark is a consumer of these commerce technologies and has good insights into the issues in the ecosystem that needs to be addressed

Michael Goo, VP – Strategic Initiatives, T-Mobile – Michael has been the co-architect of the ISIS business model and deeply involved in all things mobile commerce